Amid layoffs, Disney CEO recommits to Connecticut-based ESPN

Walt Disney is laying off 3 percent of its workforce, but the company's returning CEO is publicly recommitting to Disney's Bristol-based subsidiary ESPN as an integral part of its platform.

Disney is eliminating about 7,000 jobs, amid a rash of layoffs in the larger tech sector but continuing strength in hiring across the broader U.S. economy, including in Connecticut. Disney is cutting jobs despite higher earnings last year, with profits up 18 percent to nearly $1.4 billion driven by its theme parks.

While Disney's U.S. channels maintained revenue at levels of a year earlier, the company saw declines in international channels.

An ESPN spokesperson said the company is not elaborating further at present in any impact from Disney layoffs, with ESPN having about 4,000 employees in Connecticut. Hearst Corp. holds a minority share of ESPN.

Disney rehired Bob Iger as CEO late last year, replacing Bob Chapek who held the role less than three years. Chapek said last year that Disney had received dozens of offers for ESPN from would-be acquirers.

Under Iger, Disney is restructuring into three big divisions centered on theme parks, entertainment and sports centered on ESPN. On the heels of the announcement, activist investor Nelson Peltz announced he would end a proxy battle for control of Disney's board, signaling approval for the company's initiatives since Iger's return.

In response to an analyst's question on a Wednesday conference call, Iger said the decision to have ESPN stand alone as a subsidiary was not a prelude to a sale of the broadcaster, and that Disney plans to continue to focus on the ESPN+ streaming platform as cable subscribers continue to cut the cord in favor of streaming. ESPN reported this week that ESPN+ generated 108.2 million average monthly unique visitors in 2022.

“We are fairly certain that when we created the structure and broke ESPN out on its own that it would lead to questions like this — we did not do it for that purpose,” Iger said Wednesday. “ESPN is a differentiator for this company — it's the best sports brand in television, it's one of the best sports brand in sports. It continues to create real value for us. It is going through some obviously challenging times, because of what's happened in linear programming.”

Iger suggested ESPN will be picking and choosing among upcoming opportunities for league broadcast rights, with the NBA a big one on the calendar as its current contract with Disney and TNT comes up for renewal in two years.

“We've got some decisions that we have to make coming up,” Iger said. “We're simply going to have to get more selective.”

Under the restructuring, ESPN's financial performance will be public record starting this year as a stand-alone unit. Until now, Disney has lumped ESPN results into a “linear networks” category that has included ABC, Disney Channel, Freeform, FX, and National Geographic.

Jimmy Pitaro will continue as chairman of ESPN, with Pitaro relaying his reaction last December to Iger's hire during an interview at the Sports Video Group's SVG Summit in New York City.

“Bob put me in this chair in early 2018 — without Bob Iger, I am not here at ESPN,” Pitaro said at the SVG Summit. “Bob's a huge sports fan. We talk about this all the time at ESPN — to be effective, you need to be a fan.”

Subscriber counts for ESPN+ have been public as part of an existing “direct-to-consumer” division that has included Disney+

and Hulu. In the final three months of 2022, ESPN+ tacked on roughly 600,000 subscribers on a net basis to push the total to nearly 25 million accounts. And Disney reported a 14 percent increase in average revenue, to about $5.50 for each subscriber.

“The ESPN brand can be enjoyed and can be expressed well as a streaming brand, and I think that we are going to continue to look at that as a potential pivot for ESPN away from the linear business,” Iger said Wednesday. “But we're not going to do that precipitously — we're not going to do that until it really makes sense from an economic perspective.”

Among the other announcements by Disney, the company confirmed it will be making sequels for the “Toy Story 5” and “Frozen” franchises, as well as “Zootopia 2”. Upcoming theatrical releases this year include “Guardians of the Galaxy 3” and “The Little Mermaid” in May, and “Indiana Jones and the Dial of Destiny” in June.

In less than two months since its mid-December release, “Avatar: The Way of Water” is already the fourth best-grossing movie of all time with global box office revenue totaling nearly $2.2 billion.